Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
(Warning technical mumbo jumbo ahead)
Wednesday the S&P 500 had what is termed an outside day; that is a day where the index had a higher high than the previous day and then a lower low. It also closed out the day near the lows of the day. Generally this is short term bearish. Someone who follows technical analysis would therefore position themselves for a short term pullback…. in normal markets. But we are currently in a global central bank liquidity flood so ‘typical’ things are not happening. Instead we have an outside day followed by an inside day…
Some interesting data from Global Macro Monitor blog:
- An inside day following an outside day is a relatively rare three-day pattern and has initially happened only six times since the current bull market began on March 6, 2009.
What happens next?
- In every case, the post 5-day return on the S&P500 was positive, averaging 2.08 percent.
So we’ll see what the next 5 days bring…
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
